Ex-Xstrata CEO Davis Raises $1 Billion From Noble, TPG

Noble, Asia’s largest raw-materials trader, and TPG agreed
to each invest $500 million in the new company X2 Resources,
according to a statement today from X2 Partners, founded by
Davis and former Xstrata Chief Financial Officer Trevor Reid.

X2, also in talks with other potential investors, will use
the funds to start a diversified mining and metals group. Davis,
55, and Reid, 52, were part of the team that set up Xstrata, a
company that grew 100-fold to a market value of about $50
billion after 10 years of mergers, acquisitions and expansion.

“This is a great time to acquire assets in the mining
sector,” said John Meyer, an analyst at London-based SP Angel
Corporate Finance LLP. “The majors continue to offer sub-scale
assets, including some better quality but smaller operations as
they refocus on their larger cash generators.

‘‘Investors who follow Davis and other turnaround
specialists in the sector could make a killing,’’ he said.

Las Bambas

Glencore International Plc (GLEN), which in May completed the $29
billion all-share purchase of Xstrata, aims to sell Las Bambas,
a Peruvian copper project it inherited from the takeover, to
meet the terms of Chinese regulatory approval for the deal that
created the world’s fourth-largest mining company.

X2 ‘‘will bid against the Chinese or maybe even with the
Chinese for the Las Bambas copper mine in Peru,’’ Meyer said.
‘‘I wonder if they would also look to move into certain bulk
commodities, e.g. iron ore and bauxite in Africa. There are
opportunities for quick and large returns in this area for well-planned projects with relatively little outlay.’’

For Noble, the deal is an opportunity for the Singapore-listed company to mount a challenge to Glencore, according to
Paul Gait, a mining analyst at Sanford C. Bernstein Ltd.

‘‘Noble sees a once relatively smaller-scale trader now
becoming the fourth-biggest mining company as well and feels a
strategic threat to its ability to secure tonnages going
forward,’’ Gait said. ‘‘The need for flow of material seems to
force traders to go upstream, and Noble in Mick certainly finds
the track record and experience to deliver that.’’

Repeat Success

Noble’s income from supply chains gained 12 percent in the
second quarter as it continued to source more coal and added new
hires to its oil and gas business, it said Aug. 8. The trader’s
net income slid 68 percent to $62.8 million in the three months
ended June 30, mainly from an agricultural-unit loss, it said.

Regent’s Magris Resources Inc. is considering a bid, people
with knowledge of the matter said last month. Jiangxi Copper
Co. (358), China’s largest producer of the metal, is interested in Las
Bambas, Company Secretary Pan Qifang said the same day.

X2 investors expect a repeat of the success Davis had with
Xstrata, Meyer said. Noble will be X2’s preferred marketer and
provider of supply-chain management and logistics services,
while TPG, overseeing $55.3 billion of assets, will bring deals
and access to investors, according to the statement.

Davis left as CEO of Glencore Xstrata in May, opting not to
stay in the role for six months after the takeover, as had been
planned. Glencore chief Ivan Glasenberg, 56, became CEO.

Goldman Sachs Group Inc. acted as financial adviser to X2
in the Noble-TPG transaction, according to the statement.